NFU launches model dairy contract

Dairy contracts are to receive a “long-overdue modernisation” following the launch of the NFU’s long-awaited model milk contract.

Designed to bring greater fairness and encourage farmers to work more closely with processors, the contract sets out the NFU’s ideal terms and conditions for a milk contract.

Table: Key points in the contract

Gwyn Jones, NFU dairy board chairman, said the model contract would encourage simplicity in milk contracts, as well as providing farmers with more negotiating powers.

“Contracts have been improving, but they are pretty complicated and farmers’ understanding of them is not good,” he said.

‘Flexibility’

“It’s important to promote long term relations between farmers and processors and to provide flexibility, and we hope this contract will help do that.”

Mr Jones said farmers and supply groups should consider which aspects of the contract, which include considering rolling, fixed-volume contracts, agreeing standardised milk testing and the ability to supply more than one processor, they want to negotiate with processors.

‘Modernisation’

“If nothing else, this is a long-overdue modernisation of the dairy contract and will encourage farmers to put pressure on processors.

“There’s a balance of supply and demand now which is in farmers favour and if they don’t capitalise on it they will regret it.”

Mr Jones said the NFU had worked with farmers groups and processors to draw up the model contract and that responses had been “very positive”.

Excellent position

Farmers were in an excellent position to negotiate and processors would be likely to listen, he added.

“Given the current market position, if a majority of a group wants a contract to change, it will change.

“On the processing side, if a processor has a responsible contract in place, farmers will be attracted to that company. The benefits are for everyone.”

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